A Historical Analysis of the "Marriage Tax Penalty"

By Brozovsky, John; Cataldo, A. J., II | The Accounting Historians Journal, June 1994 | Go to article overview

A Historical Analysis of the "Marriage Tax Penalty"


Brozovsky, John, Cataldo, A. J., II, The Accounting Historians Journal


INTRODUCTION

Increased individual marginal federal income tax rates have recently been adopted for "high income" taxpayers. As tax rate schedules become more progressive, the "marriage tax penalty" (MTP) is again becoming a topic of interest (i.e., Alm & Whittington [1993], and Schultz 1993]).

This paper explores the historical development of components of basic individual federal income taxation leading to MTPs and the less frequently addressed "marriage tax bonuses" (MTBs) or "subsidies". Insight is provided to correct for confusion in contemporary research efforts, with respect to the historical incidence (or lack thereof) of "marriage neutrality". A historical framework is developed which will be useful to future researchers as a means of examining the development of the entire federal income tax system. Within this general framework, a detailed discussion of MTPs and MTBs is presented. In addition, historical methods found to mitigate MTPs and MTBs are identified and their potential for application (and limitations) in future policy decisions is examined.

Basic historical tax law was reviewed to generate tax liabilities for married (filing jointly and with no dependents) and single, non-itemizer taxpayers. The "adjusted gross income" (AGI) levels used were developed from Statistics Of Income(1) (SOI) data provided by the Internal Revenue Service (IRS). The first such IRS publication (June 1918) emphasized descriptive statistics of 1916 tax returns, providing lesser information for the 1914 and 1915 tax years. Detailed data for 1913 individual federal income tax returns was omitted from analysis, due to the inconsistency of this ten month period (i.e., March 1 through December 31, 1913) with future tax years.

Analyses of MTPs and MTBs are based on the calculation o approximately 727 "short form" (i.e., non-itemized) tax returns for first (low income(2)) quartile, third (high income(2)) quartile, and weighted average-based taxpayer AGI levels.(3) (Appendix A provides a detailed list of these income levels for any tax researcher who is interested in a historical analysis of the tax law and its effect on a broad base of taxpayers.[appendix a omitted) All analyses presumed wages to be the only source of income.

The potential for marriage tax bonuses have exceeded that for marriage tax penalties in both frequency and amount, for first through third quartile-based taxpayer AGI levels throughout the history of our current system of federal individual income taxation. Such historical findings suggest that solutions to present and future MTPs must simultaneously address the exposure to revenue losses attributable to MTBs.

MTPs were effectively mitigated, throughout this range of taxpayer AGI levels via the variable standard deduction (1944 through 1963) and its predecessor, a revised "earned income credit" (1934 through 1943). The "two-earner deduction" (1982 through 1986) and its predecessor, a ($500 maximum) "earned income" deduction (1944 and 1945), were also successful in reducing MTPs.

DEFINITION OF THE MARRIAGE TAX PENALTY

Definitions of the "marriage tax penalty" have varied. Fox [1988] defined and analyzed the two separate components of the MTP as the "rate factor" and the "base factor". Rosen [1987] did not distinguish between the (relatively recent) more significant "rate" and less vital "base" effects, but included the impact of the current "earned income credit" (EIC) in his calculations of MTPs and MTBs. McIntyre [1988] suggested that disaggregation of the EIC would have been more useful in Rosen's analysis, distinguishing between "spending" (EIC) and "tax" (combined "rate" and "base" effects) policy issues. Jagolinzer and Strefeler 19861 and Tilt and Spencer [1983] used a more fully developed definition of the MTP in an effort to identify (but not to model the relative impacts of) all tax provisions resulting in different tax liabilities based solely on marital status. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

A Historical Analysis of the "Marriage Tax Penalty"
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.